Home owners keen to use their borrowing power to further their property investments are making things harder for first home buyers.
New data from the Australian Bureau of Statistics have revealed that the value of home loans taken out by property owners from January to May this year compared to first home buyer loans is the highest it has been for 16 years.
The gap between the two has now risen to 11.65 per cent which is the highest it’s been since August 2000.
Finder.com.au’s Bessie Hassan told The Age first home buyer loans were remaining fairly steady but property owner loans were on the rise.
“Generally non-first home buyers are in a stronger position to service a mortgage, which could mean they qualify for finance more easily,” she said.
“As a result, this creates greater competition within the property market, which could mean that first home buyers are being squeezed out of the market as they try to compete with cashed-up non-first home buyers, particularly in capital cities on Australia’s eastern seaboard.”
Economist Saul Eslake said it was property investors rather than owner-occupiers that presented the greatest competition for first home buyers trying to enter the market because they were more likely to be interested in the same sorts of property.
“I think in the absence of any policy measures designed to remove some of the pull factor for investors, first home buyers will continue to get squeezed out,” he told The Age.
First home buyer loans have in the past shown sharp spikes when significant government grants have been offered such as in 2009.
With record low interest rates and the possibility of more cuts to come, getting a home loan couldn’t be much easier but wHeregroup’s Todd Hunter told The Age low interest rates aren’t the answer for first home buyers.
“If they’re not going to jump in now are they going to jump in if it goes down another 0.25 per cent?” he said.
“They need to realise they’re not going to get their dream home; it’s not going to be their forever home but a stepping stone into the property market, like most of their parents and their parents took.”